Reverse Mortgage

Reverse mortgages essentially lend the owner of the home the money back that they put into the mortgage. The loan is based off of many factors, including the age of the borrower. This is an ideal loan for individuals who are older, do not have anyone to will their property to after death, and who do not want to move into a retirement home.

Reverse Mortgages: The Basics

Reverse mortgage loans are a special type of home loan. They let you convert the equity in your home into cash. As long as the borrower remains in the home, as their primary residence, they will not have to repay the money. One must be at least 62 years old to get reverse mortgages. The reverse mortgage must be the only mortgage on the property. The individual will also be asked to undertake credit consultation before the loan will be issued. Essentially, reverse mortgages are not based on your income. Reverse mortgage loans solely depend upon the age of the borrower, the current interest rate, and the appraised value of the home.

When Loans Must Be Repaid

The two main reasons why the loan would need to be paid in full is that one has failed to meet the obligations of the mortgage, and the home the reverse mortgage has been taken on is no longer your primary residence. Other factors that would make the loan due is the death of the borrower or you sell the home. The failure to pay the taxes on the home would result in the demand for immediate payment, as would the failure to keep the home up. Repairs do still need to be made to retain the value of the home. Finally, if the borrower moves out of the home and it is not their primary residence any longer, the mortgage would need to be repaid. This includes being put into a nursing home for 12 consecutive months or more.

Options For Reverse Mortgage Loans Payments

There are five ways in which one may receive payments from their reverse mortgages. The first option is called tenure. This is a series of equal payments for as long as you live in the home. The second is Term which entails equal monthly payments for a fixed number of months. Line of credit entails unscheduled payments for times and amounts of borrowers’ choice. Modified tenure is a combination of a line of credit with monthly payments. Finally modified term is also a combination that includes line of credit with fixed monthly payments of the borrowers’ choosing.

Reverse Mortgages: Conclusion

Reverse mortgage loans are not taxable. The older the borrower is at the time reverse mortgages are taken out, the more lenient the terms of the loan will be. Reverse mortgages do not, and never affect any Social Security payments or Medicare benefits. These loans are ideal for emergencies.